Co-op – the bank who don’t understand small businesses

Last year I started a gardening business. I did ok and put a lot of work into building up a customer base and got quite a bit of work, but gardening work is very seasonal and I didn’t make enough to see me through the winter. The first year was always going to be tough, it’s just one of the realities of starting any small business. Instead of getting into debt I decided to spend the winter staying with family, resolving to take what I’d learnt in my first year (a lot) and come back to it in the spring with a much better sense of how to make it a viable year-round business.

I’ve only been back to it a couple of weeks and I was asked to do a job for which I needed to order a large amount of materials (roughly double the labour cost). Last year I didn’t do any jobs involving material costs just because they tend to be the bigger projects, which I avoided because I was still establishing a group of contacts I could call in for help.

Partly because the reason I got the job was the customer had been ripped off by a cowboy, and partly because I think it’s important to project an image of success in business, I hadn’t asked the customer to pay anything up-front. Unfortunately as both the companies I was ordering supplies from are small businesses themselves, and I’d never done business with them before, they wanted payment upfront.

Frustratingly I was just £50 short. No problem I thought, I’ll just call the bank and ask for a temporary overdraft facility, it’s just a cash-flow problem I’m sure they’ll be able to help. Well it turned out I was wrong. I called the bank and was told that someone from the lending department would call me back. Fair enough I thought, and someone rang me within an hour. I explained that I just needed a £50 overdraft facility for a few days and was told that because there had been very little turnover on the account in recent months that this wasn’t possible. I explained that this was because it’s a gardening business so seasonal by nature, but was still told no. It’s that old banking adage that to get a loan you have to prove you don’t need one.

I would have thought that they would be more willing to help. Don’t the Co-op bank understand that cash-flow problems are one of, if not the most common problem faced by small businesses? As the go-to bank for members of the Federation of Small Businesses you’d think they would, and when you’re only asking to borrow £50 it really doesn’t seem like too much to ask.



Management Speak nonsense from Co-op Bank

Today I received this letter from the Co-op Bank, some of which is an assault on the English language.

Dear Mr Stent

I wanted to write to you personally to thank you for standing by us during some of the most difficult times in our history. Whilst we still have some challenges ahead, I now want to update you on the progress we have made.

I am pleased to say that we have strengthened both our capital position and our management team. We have also put in place a business plan which we intend will restore us to longer-term sustainable profitability over time. This means that we are now able to look forward and begin to reshape our business around what’s important to our customers.

For over 140 years the ethics and values of The Co-operative Bank have set us apart and I’m proud to say that these ideals are now enshrined in our constitution. We would like to build on this heritage and want to do this in partnership with you. As such, this spring we will be engaging with you around what’s important to you going forward.

I would also like to reassure you that we remain focused on providing great customer service and meeting your day-to-day banking needs. We
are committed to delivering products and services to make it more rewarding and easier to bank with us. We will improve our online banking service and our mobile banking application as well as providing exclusive product offers for existing customers.

Whilst delivering our plan remains challenging, I hope I have given you a sense of some of the steps we have taken both to strengthen the business and begin to reward the faith you have shown us. Thank you once again for your loyalty and for banking with The Co-operative Bank.

Yours sincerely

Niall Booker
Chief Executive, The Co-operative Bank

Several parts of the letter are written in opaque management speak, but the part that struck me the most was “engaging with you around what’s important to you going forward”. Engaging around what’s important suggests that engagement will involve everything but things that are important. I’d much prefer it if the engagement were about what’s important. Also why must I be “going forward”? What if I want to talk about things that are important to me and stay still? Or is it the bank that’s going forward, if so where are they going? It’s all very confusing.

Aside from the management speak and poor use of English I’d be interested to know how they will be improving their online banking, because in the 15 years since they launched Smile, their online banking has changed very little. During this time the other banks have launched their own online banking, which in most cases started off better and has continued to improve. So I will believe it when I see it.

Why you shouldn’t overlook the power of the email list

With all the benefits that social media can bring to your business, it’s easy to overlook the humble email, but if you do you’re really missing a trick. Let me explain why.

If you use a Facebook page for your business, when you post a message, on average only 10% of your followers will see that message. Facebook tweak their software that way, because they can charge people to make their posts more visible. A similar percentage applies to Twitter where most of your followers will be following hundreds if not thousands of other accounts, so unless they happen to be looking at their feed the moment you post, it’s likely they won’t see it.

In contrast, if you send someone an email you can almost guarantee they are going to know about it. Admittedly there’s always a chance they could delete it without reading it, but at least they know you said something.

The difference between social media and email is like the difference between traditional advertising and direct marketing. With advertising lots of people will see it, lots won’t, and only a small percentage of those that do will be interested. With direct marketing you know exactly who’s going to see it and you can be fairly sure they’ll be interested because (hopefully) they signed up to your mailing list.

With the buzz and excitement around social media the last few years I’ve seen many small businesses become fixated on getting more likes or follows, and it’s not necessarily time well spent. While social media can be a hugely powerful tool to promote your business it’s almost like most people have forgotten email exists when they think about their marketing strategy. Before social media came along the email mailing list was the main way businesses kept their customers updated. As I often say about technology, when something new comes along it doesn’t make the old thing suddenly become less useful. (which is why I use one of these)

So if you don’t already have an email list it’s really worth starting one, either via your website or getting addresses in person. You can keep it simple by just storing them in a spreadsheet, or use something like MailChimp. If you go with the spreadsheet option you can always import it into MailChimp or a similar tool later.

Once you have the list I’d advise doing a mailout no more frequently than once a month, so as not to annoy people, keep it to 2 or 3 paragraphs and spend a bit of time thinking about it.

Thanks for reading and if you follow this advice let me know how you got on. You can comment here or tweet me @RobinStent.